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The Emergency Economic Stabilization Act of 2008 recently signed by President Bush also approved a shortened recovery period for leaseholds, restaurant property and improvements for retail property that will be beneficial to businesses.

The new law extends through December 31, 2009 the shortened 15-year recovery period for Qualified Leasehold Improvements and Qualified Restaurant Property. In general, qualified leasehold improvement property is an interior improvement to a building that qualifies for bonus first-year depreciation, except that if a lessor makes an improvement that is a qualified leasehold improvement, it can't be qualified leasehold improvement property to any subsequent owner, subject to exceptions for nonrecognition and death transfers.

Qualified restaurant property is any Code sec. 1250 property which is an improvement to a building if the improvement is placed in service more than three years after the date the building was first placed in service and more than 50 percent of the buildings square footage is devoted to preparation of, and seating for on-site premises consumption of, prepared meals.

The Act also creates a 15-year recovery period for Qualified Retail Improvement Property placed in service after Dec. 31, 2008 and before Jan. 1, 2010. Qualified retail improvement property is any improvement to an interior portion of a nonresidential building where a) the improved portion of the building is open to the general public and is used in the retail trade or business of selling tangible personal property; and b) the improvement is made more than three years after the date the building was first placed in service.

If you have any questions on this matter, please contact your Rea advisor.

-By Joseph Popp, Esq. (Dublin office)


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